Investors seeking current financial opportunities
In the ever-evolving world of finance, the battle between active and passive investment strategies continues to unfold. The year 2025 has brought about a notable improvement in active fund management performance, particularly in global markets.
According to recent data, 51% of active global funds outperformed their passive counterparts in the first half of 2025, marking the first time since 2021 that active managers achieved a win rate above 50% against passive funds over the periods analyzed[1][2]. Despite this improvement, the longer-term picture remains challenging for active funds, with only about 30% beating comparable index trackers over the past ten years—a record low indicating persistent difficulties over the decade[1][2].
This resurgence of active management is linked to specific market conditions, including volatility and inefficiencies in certain sectors. For example, active managers tend to add value in less efficient or more volatile markets, such as fixed income or alternative investments, where they can dynamically adjust portfolios and manage risks that passive strategies cannot as effectively handle[3]. This is evident in 2025's volatile high-yield markets, where active exchange-traded funds (ETFs) have outperformed passive strategies thanks to their strategic adaptability and enhanced risk management[4].
However, the trend is uneven across regions and sectors. For instance, active management in UK equities underperformed with only 29% outperforming benchmarks in H1 2025, partly due to weak mid and small cap stock performance, which may continue to challenge active managers long term[1].
Experts recommend a balanced approach combining active and passive investing based on market conditions, risk tolerance, and investment horizon as the most prudent strategy to navigate ongoing uncertainties[3].
In the realm of cryptocurrencies, ByteTree, an investment research firm, has introduced a Bitcoin and Gold ETF (BOLD) managed by 21Shares in Zurich[5]. Copper, gold, and precious metals are beneficiaries of a weak dollar, money printing, and burgeoning deficits, making them attractive investments for many.
Passive management, despite being vast, delivers a market return before fees. It is suitable for people who do not want to take an interest in their finances. On the other hand, trading in index products accounts for 56% of market volume, compared to its infancy in 1995[6].
Charlie Morris, the CEO and founder of ByteTree, offers investment research for private clients. He is among the many voices urging investors to stay informed and make informed decisions, whether they choose active or passive management strategies.
References: 1. CKGSB Knowledge 2. Financial Times 3. Barron's 4. ETF.com 5. ByteTree 6. IndexUniverse
- The improved performance of active fund management in 2025, particularly in global markets, has seen 51% of active global funds outperforming their passive counterparts, marking a significant shift since 2021.
- Active investing strategies, such as managing risks and dynamically adjusting portfolios, have shown to be more effective in less efficient or volatile markets like fixed income and alternative investments.
- Despite the resurgence of active management in certain sectors, the longer-term picture remains challenging for active funds, with only about 30% beating comparable index trackers over the past ten years.
- In the world of personal-finance, passive management, though delivering a market return before fees, may be more suitable for individuals who prefer not to take an active interest in their finances.
- Given ongoing market uncertainties, experts advise a balanced approach to investing that combines both active and passive strategies based on risk tolerance, investment horizon, and specific market conditions.
